The torque output of the engine is really irrelevant here. If you want more torque to the ground gear down. What you need from the engine is power (torque @ rpm) so that while your gearing is making the torque you need, your engine is still producing the rpm you need for the travel/tire speed you're after.
Run the numbers on torque in any given gear at any given output shaft speed and you will see that with any engine power/torque output you try, that by the time you gear the engine's output rpm to that needed for your ground/tire speed the engine with the most power will be producing the most shaft torque all the time, everytime.
And a 5.9 cummins would throw an M35 around like a rag doll. You can build a very reliable 5.9 at around 500hp on fuel. That will be more than capable of melting and breaking every piece of drivetrain you own without breaking a sweat.
Now if you were planning on using the truck like an OTR tractor pulling 50k or more for hours on end at highway speeds, then I would say a larger displacement engine would be needed to keep the service life higher. But what it sounds like to me, is relatively low speed service, with the need for relatively substantial bursts of power when required.
I think a 5.9 would handle this with ease. And I would never consider a 3116 over a 5.9. A 5.9 is fully scalable from 150 or so hp to upward of 1300 to 1800+. There have been so many of them running over 1000hp on stock internals that the strength of the engine in the 300 or so hp range is really not in question.
I would run a 300 to 400hp 6BT if it were me. I would also run a 4R100 automatic trans behind it as well. New pickup trucks come stock making the power you are after. They are also rated to tow in the 25000k range too. I think a light diesel would fit the bill if you don't find what you're looking for in a larger displacement engine.
Good Luck with the virtual build though.